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China and Turkey after 9/11
I was in my Office at the Central Bank of Turkey, preparing for a meeting with the IMF team when the first plane hit the Twin Towers. So much has changed since, and the most important aspect of it has nothing to do with the so-called “war on terror” that started afterwards.
China’s GDP per capita was around $1,053 in 2001 and has now reached $10,050. Yes, that’s a tenfold increase in two decades. How about Turkey? We stood at around $3,300 in 2001 and are now at $8,500. That’s a 2.5-fold increase in the same timespan. The Chinese growth process marched on rapidly. Turkey, like an Ottoman military band, walked three steps forward and one step back.
American GDP per capita was around $37.133 in 2001, about thirty-five times that of China. Now it stands at $63,500, only six times larger than that of China. American’s Cold War policy of integrating China into the global economy was a phenomenal success.
Yet the experiment appears to have gotten out of control, and you can see that when looking at the data for patent applications to the World Intellectual Property Organization (WIPO), for example. In 2001, the US was leading the number of patent applications with around 177,513 patent applications a year, with China a distant second at around 30,000 applications. Turkish patent applications were at just 337 a year two decades ago.
Today, Chinese patent applications have far surpassed the Americans at 1,250,000 to 258,000 a year, as far as I can see. Turkey still lags far behind at 7,871. Now, you might say that 337 to 7,871 applications a year in two decades is not that bad. But even Iran had around 15,000 patent applications in 2019. If you aren’t creative these days, you will be left behind in the long run.
A similar trend is visible in the number of publications in scientific journals. In 2001, US citizens published about 305,000 articles and Chinese citizens around 70,000. In 2018, US citizens published 422,000 and Chinese 528,000. Publications by Turkish citizens rose from 8,500 to 33,500 from 2001 to 2018, according to World Bank database. Again, it’s not standstill, but it’s hardly where it should be.
I remember a debate in Istanbul between Chinese and American officials about ten years ago. The Americans were starting to get more and more uncomfortable with China’s rise, and the American official was not holding back their official complaints, including intellectual property theft. The Chinese official responded by saying that if the Americans didn’t like the current world order, they should think harder about what they did to set it up. “It is you who taught us what to do at the outset,” he said. This is a common response from the developed world. The Americans were at such a dominant position after the Cold War (some may even say after WWII) that everything that has happened since then can be traced back to their actions.
Back then, China was at its “hide your brightness, bide your time” policy set by Deng Xiaoping. Now the data shows us that the worst fears of American analysts have come to life.
Perhaps the most impressive thing about China, however, is that it isn’t like other developing nationalist countries. They are not only about mindless competition, but understand that they have to take on responsibility in order to lead. They have ratified the Paris Agreement, set a goal to reach net zero emissions by 2060, and set up an Emission Trading Scheme (ETS) to start carbon pricing. Turkey remains the only G20 country that has not ratified the Paris Agreement and is not even close to setting goals for net zero emissions and carbon pricing.
Twenty years on, the people who have my job at the Central Bank of the Republic of Turkey today have to deal with a much more complicated world. They have to be smarter than I was, read more, travel more. They can’t just talk to economists, they have to talk to scientists, engineers, businesspeople, diplomats and soldiers. Their colleagues across the world understand that, but I’m not sure they do.